Trade Imbalance Doesn't Cost US Jobs, Japan Says

ByCameron W. Barr, TokyoMay 18, 1994

THE Japanese government is quietly trying to unravel President Clinton's assertion that Japan's huge trade imbalance with the United States costs Americans jobs.

An annual white paper released May 17 by Japan's Ministry of International Trade and Industry (MITI) argues that there is no correlation between a country's level of employment and whether or not it exports more than it imports.

Based on 1980s data, a chart in the white paper shows that Japan had low unemployment and a high current account surplus, one equivalent to about 2 percent of its gross domestic product. Yet the Netherlands had a current account surplus that was an even larger share of its GDP and near 10 percent unemployment.

Japan actually takes the money it earns from exports and invests it overseas, thereby creating jobs abroad, the report argues. ``Trade,'' says Midori Tani, a MITI official and principal author of the report, ``cannot deprive people of employment.''

The report's issuance all but coincides with a low-key resumption of US-Japan trade talks, which were set to begin May 19. The two sides are at odds over access to Japan's vast market. The US says it wants ways to measure progress in Japan's efforts to open its markets to world goods, an idea that Tokyo rejects, equating it with establishing quotas for foreign products.

Regardless of MITI's attempt to minimize the importance of Japan's trade deficit, there is increasing consensus on both sides that the deficit, in and of itself, is not the problem. ``The issue is not primarily the size of the bilateral trade deficit,'' said former US trade negotiator Clyde Prestowitz, a seasoned critic of Japan's trade practices, at a recent Tokyo luncheon. ``It has much more to do with the ability of producers ... to exploit a comparative advantage, when they have one, in Japan.''

The answer to unemployment, MITI says, is more international commerce: ``Free trade, which promotes investment, has positive effects on world economic growth and employment.''